Who this is for
Licensed BC agents earning enough to wonder about incorporating, and agents who already have a PREC and are not sure it is worth it. This is general information. Whether to incorporate is a decision to make with your own figures, and with a lawyer for the set-up.
The seven questions
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Do you earn more than you need to live on, year after year? The benefit of a PREC comes from income that stays in the corporation and is taxed at the corporate rate until you take it out. If every dollar comes out, there is little to gain.
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Can you actually leave money in it? A PREC that holds retained earnings needs discipline. Money taken out without a plan becomes a problem at year end, and it cannot be re-labelled afterwards.
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What does it cost to run? A PREC must be licensed with BCFSA, with its own fees and reporting. Add a corporate return, bookkeeping, a minute book, and payroll or dividend slips every year. Those costs are certain; the savings are conditional.
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Salary or dividends, and do you want RRSP room? Salary from the PREC builds RRSP room and CPP but needs payroll. Dividends are simpler but build neither. Our salary-or-dividends guide covers it.
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What changes for GST and records? The PREC becomes the GST registrant and the brokerage pays the PREC. Records split into corporate and personal. Our realtor record retention guide explains the rules.
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Is family involved? The BC rules allow non-voting shares to be held by certain family members, with the licensee holding all voting shares. Whether that is useful depends on income-splitting rules that have their own tests. This is where advice is essential.
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What is your exit? Retirement, a move to another brokerage, leaving the industry. A PREC has to be wound up or kept filing. Think about the end before the start.
One thing many people do not realize
A PREC does not reduce tax on money you take out and spend. Commissions that flow through the corporation and come straight back out as salary or dividends end up taxed at roughly the same overall level. It is close to what you would pay earning them personally. The advantage, when there is one, comes from money that stays in the corporation. If nothing stays, the PREC is mostly cost.
What to prepare
- Last two personal returns
- Your commission total for the current year to date
- A realistic figure for what you need to take out each year
- Whether family members would be involved
- Your brokerage’s requirements for PRECs
When professional help may make sense
This decision is one. The set-up needs a lawyer for the incorporation and BCFSA licensing, and an accountant for the numbers and the ongoing filings. Nobody should incorporate because a colleague did.
How Rex Tax may be able to help
We run the numbers with you using your actual figures and explain the ongoing costs plainly. If you proceed, we prepare the PREC’s returns and coordinate them with your personal return. We do not recommend incorporation universally, and we say so when it does not fit.
From the Rex Tax desk
The agents who come to us asking whether to incorporate usually have the question backwards. The question is not whether a PREC saves tax. It is whether you will leave money in it. Agents who can answer that with a number, and who are prepared to run a corporation properly, are the ones it tends to work for.
Official sources
- BCFSA: Personal Real Estate Corporation guidelines
- CRA: Corporation income tax return (T2)
- CRA: Definitions for RRSPs (earned income)
This guide is general information, not advice about your situation. It reflects the rules for the 2026 tax year. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.